Payday and its importance in the payroll process- Updated on Feb 08, 2023 - 11:00 AM by 123PayStubs Team
Payroll is the process of calculating and distributing wages and taxes to pay employees during each pay period. One of the main things that the employers have to make sure in the payroll process is that they have paid their employees on-time.
Before getting started about the payday and its importance, the employers have to know about the pay schedule for an efficient payroll process.
Here is a list of topics that are covered related to the payday in the payroll.
What is a pay schedule?
A pay schedule is a period of time for which the wages will be paid to the employees.
It is up to the employers to decide how often they want to pay their employees for the work they perform and it will be done at the time of hiring the employees.
The most commonly used pay schedules are weekly, biweekly, and semi-monthly.
What is a pay period?
A pay period is a timeframe during which your employees have worked and, based on your pay schedule, you’ll be paying your employees, i.e., payday. Simply put, the beginning and the end dates of the pay schedule is actually considered as the pay period.
What is a payday?
Payday is the day where the employees will be paid off. It is a fixed number of days after the end of the pay period. Some employers pay their employees by direct deposit and some prefer to pay by writing a check.
How does the pay schedule determine the payday?
For example: Consider the pay schedule is semi-monthly. The employees will be paid 24 times a year which means there will be 24 paydays an employer will have for a year.
And if the pay schedule is biweekly, then the employees will be paid 26 times a year which lets the employers have 26 paydays for a year.
How does payday determine the payroll tax deposits deadline?
The payday will also help the employer to determine the payroll tax deposits deadline as per the deposit schedule defined by the IRS and the quarterly tax filing deadline.
For example: Consider an employee who is paid by the 1st of July for the work performed in June. The payroll tax deposit for the employer will be due by August 15 considering an employer as a monthly depositor. In case if the employees were paid on June 30th, then the deadline for payroll tax deposits should be made within July 15th.
Payday - Yet another important aspect of payroll tax calculations
Payday is an important day for the employer, as it has a lot more to do other than paying wages to their employees.
Running payroll and providing pay stubs to the employees is not that a simple process as it involves a lot of payroll tax calculations. Each and every employer is responsible to withhold certain Federal and State taxes from the employees’ paycheck.
All the tax withholdings have to be remitted to the respective Federal and State agencies on time based on the deposit schedule that the IRS declared for the employer.
The payroll calculations for each payday has to be more accurate as the Federal and State agencies will use it to reconcile the information against the proof that is provided by the employees on their income tax return at the year-end.
Any mismatch in calculations will cost the employer a huge penalty. None of the small business owners like getting such a huge penalty from the Federal or State.
One way to avoid such a penalty and to provide your employees with the paystubs that have accurate tax withholding calculations is to access 123PayStubs.
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Still, there are a lot more reasons for you to choose 123PayStubs. Visit 123Paystubs.com to know more.